regulation

Will nonprofit hospitals get a pass on noncompetes?

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No news was bigger last week than the Federal Trade Commission’s ban on noncompete agreements. If implemented, it would upend the competitive landscape between nonprofit and for-profit hospitals. That’s because the agency acknowledged — to the chagrin of at least one commissioner — that its power doesn’t extend to nonprofits, my colleague Tara Bannow reports.

However, there may be some wiggle room. The FTC estimated that “some portion” of the 58% of tax-exempt hospitals and the 19% of government hospitals likely fall under the final rule if they behave like for-profits (*blank stare*). 

Large, wealthy nonprofit health systems have long been criticized for acting like for-profits. Ascension runs a Wall Street-style private equity fund. CommonSpirit Health paid its CEO $35 million in 2021. Some big systems essentially have their own earnings calls. But to actually make nonprofit hospitals subject to the noncompete ban, someone would have to sue, kicking off a “long, arduous process,” Robert Slavkin, a health care attorney at the law firm Akerman, told Tara.

Of course, all of this might be moot. Multiple lawsuits argue the FTC overstepped its authority. We are, realistically, years away from this being resolved. But the rule has at least forced companies to think differently about how they employ people. As Slavkin told Tara: “These types of steps forward — the good, the bad, and the ugly — have an effect on the way things are done.”

insurance

MultiPlanning on more legal costs

MultiPlan is facing a new class action lawsuit — initiated by a for-profit hospital company called Allegiance Health Management — that alleges MultiPlan and large health insurers “conspired to fix, suppress, and stabilize” payments made for out-of-network medical claims.

The lawsuit comes just weeks after the aforementioned Hamby of the NYT published an in-depth report about how MultiPlan and its insurance company clients operate. Before that story, a different hospital system, AdventHealth, had launched the first big legal assault on MultiPlan.

These lawsuits are (allegedly) exposing both how insurers profit by low-balling payments for out-of-network care, but also how some providers believe they have an unquestioned right to collect inflated amounts if they don’t participate in insurance networks. Patients, meanwhile, are stuck in the middle with bills they often cannot afford. Read more to understand the lawsuit and its allegations, see which insurers are getting roped in with MultiPlan, and get a small taste of what Allegiance is.

medicaid

When Medicaid rates go commercial

Hospitals and other providers love to gripe about Medicaid because they claim the program pays the least of any insurance program out there. Well, except for when it pays like commercial health plans.

The Biden administration finalized a host of Medicaid rules last week, and there is one provision that is an absolute boon for hospitals. It involves what’s known as “state directed payments.” Essentially, these arrangements allow states and their managed Medicaid insurance companies to increase payment rates for certain providers, such as safety net hospitals that treat high numbers of poor people. The Government Accountability Office said these directed payments cost $38.5 billion total in 2022, and the Medicaid and CHIP Payment and Access Commission has raised concerns about their lack of transparency. 

The final rule allows state Medicaid programs to boost directed payments to hospitals and nursing homes as long as they do “not exceed the average commercial rate,” which the government vaguely defined as the “average rate paid for services by the highest claiming third-party payers for specific services as measured by claims volume.” In other words, the Centers for Medicare and Medicaid Services just signed off on some Medicaid payments being on par with employer-based health insurance price tags (and we know commercial prices are extremely problematic).

“If you allow states to pay hospitals’ average commercial rates, you’ve just given [hospitals] another reason to keep raising their average commercial rates,” said Ann Kempski, an independent health policy consultant with more than two decades of experience studying hospitals, Medicaid, and payment policies. “This is what the CMS people don’t seem to understand — they just turbocharged what was already a crazy commercial hospital pricing game out there.”